State auditors have found that an Indiana veterans affairs agency may have misspent nearly $775,000 in federal welfare funds.

The spending at the Indiana Department of Veterans' Affairs included more than $20,000 for couples retreats at a high-end resort and casino, $56,000 in child care benefits and $683,000 for contract employees at the agency.

In each of those cases, auditors could not find documentation that the spending met the program's criteria or that recipients were qualified.

The findings, released Tuesday, could put a small but significant amount of the state's federal welfare dollars at risk. The U.S. Department of Health and Human Services, which provides Indiana with $206 million annually through the federal Temporary Assistance for Needy Families program, can require states to repay misspent funds.

Support our journalism

The audit began last year after an IndyStar investigation found that middle-income IDVA employees had received those federal benefits intended for needy veterans, including child care and couples retreats at the upscale French Lick resort and casino. IndyStar also found that the wages of contract employees at IDVA were being paid with TANF funds, even though those employees worked primarily on other programs.

The Indiana Inspector General and Marion County Prosecutor's Office declined earlier this month to seek criminal or ethics charges against any IDVA employees. Although an IG investigation confirmed IndyStar's reporting, investigators said the agency's shoddy record-keeping prevented them from determining whether employees approved their own grants.

Adryanne Bonner, the contract employee who oversaw the agency's TANF program, is still employed there. So, too, are several other employees or managers who received IDVA benefits.

IndyStar found Bonner and her boyfriend received at least $6,700 for child care, $1,200 for a French Lick couples retreat and a voucher for an alternative horse-riding therapy program for Bonner's son.

Auditors recommended that the state "seek reimbursement from those who received services that were not allowable."

In a letter responding to the audit, IDVA and the Indiana Family and Social Services Administration, which provided the federal funds to IDVA, said they would work to determine before the end of the year whether any of the questioned costs can be justified.

"If not, then (FSSA's Division of Family Resources) must determine if recoupment is appropriate and if so, from whom," the letter said.

The actual amount of misspent funds could be even higher, since auditors only tested a sample of the agency's TANF spending. In all, the agency received $5.35 million in TANF funds since 2015. The program ended in the summer of 2018.

The scandal prompted then-IDVA Director Jim Brown's resignation, and lawmakers passed a measure last week setting new rules for how the agency doles out relief funds.

The agency's new director, Dennis Wimer, said in an emailed statement Wednesday that IDVA is implementing new policies and procedures to improve internal controls and ensure staff hours are accurately tracked and monitored.

He said the agency will work with FSSA to determine "the most appropriate resolution to all questioned costs."

The agency is also in the midst of a reorganization, Wimer said.

"I will be working with each staff member on their role and function within the newly reorganized structure," he said. "Once complete, we’ll make the organizational chart public on the IDVA website. We want to assure the public we are setting IDVA up to be the best department to serve our state’s veterans."

But some veteran advocates say the state has been too slow to respond, noting that the questionable spending persisted after it was first documented in a confidential FSSA audit in 2017.

"What has been uncovered at IDVA should outrage all Hoosiers," said Air Force veteran Lisa Wilken. "The state agency charged with advocating for veterans has been allowed to misuse funds intended for veterans in need and assistance to families in need. Such abuse doesn't line up with Honorable Service."

Retired Brig. Gen. Jim Bauerle of the Military Veterans Coalition of Indiana said the audit makes it clear the state's initial response didn't go far enough.

"What we’ve done is, we’ve taken that money away from needy people who appropriately deserve it," he said. "Any illegitimate use of that money needs to be collected back."

IndyStar reporter Chris Sikich contributed to this story.

Contact IndyStar reporter Tony Cook at 317-444-6081 or tony.cook@indystar.com. Follow him on Facebook or Twitter: @IndyStarTony.

Read the new audits of IDVA's federally funded TANF program

State Examiner Paul Joyce filed two compliance reports Tuesday — one focused on IDVA and the other focused on FSSA.